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Halozyme falls after analyst downgrade

WASHINGTON (AP) -- Shares of Halozyme Therapeutics tumbled 8 percent Thursday after a Wall Street analyst downgraded the specialty drugmaker, saying that European regulators may not approve a key cancer drug this year.

THE SPARK: Wedbush analyst Gregory Wade downgraded the stock to "neutral" from "outperform," based on negative comments from Swiss drugmaker Roche, which has been collaborating with Halozyme on an injectable form of its cancer drug, Herceptin.

"As a result of Roche's comments we are removing our expectation that Herceptin will receive approval in 2013," Wade states in a note first released Wednesday. European approval of injectable Herceptin would have triggered an automatic Roche payment to Halozyme. Without that payment, Wade lowered his 2013 revenue estimate to $45 million from $53 million. He recommends investors stay "on the sidelines" until the chances for Herceptin winning European approval become more clear.

THE BIG PICTURE: Halozyme's Enhanze technology is designed to temporarily break down a substance in the body that forms a barrier between cells, so that drugs can be absorbed faster. That would allow some drugs to be delivered by an injection instead of an IV drip.

Several companies are testing use of the company's recombinant hyaluronidase enzyme, including Roche and Pfizer, the world's biggest drug company.

Roche is testing the company's recombinant hyaluronidase enzyme for use with the cancer drugs Herceptin and MabThera.

The company's stock took a battering in August, when the FDA temporarily halted the study of a ViroPharma International drug that used Halozyme's enzyme. The agency was concerned about possible side effects on fertility, reproduction and fetal development from antibodies produced in response to the enzyme. ViroPharma said in September that the FDA gave the company permission to resume testing of the drug, which is designed for patients with a rare genetic disease that causes swelling.

SHARE ACTION: Shares of Halozyme Therapeutics Inc., based in San Diego, fell 40 cents to close at $6.69.